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FDI: Entry and ownership rule
On 16 March 2009, the Ministry of Commerce (MOFCOM) issued the Measures for the Management of Investment Overseas. (MOFCOM Order '2009' No.5) The Measure entered into force on 1 May 2009.
According to the Art.6 of the Measure, the 'overseas investment' is subject to the approval ofMOFCOM if
1) the investment occurs in a country without diplomatic relationships to China;
2) the investment occurs in special countries or regions (the list of countries and regions will be issued by the relevant authorities);
3) the total value of the investment is higher than USD 100 million;
4) the investment is spread over more than one foreign country or region; or
5) the investment creates a special purpose entity/vehicle (SPV/SPE).
According to Art.7 of the Measure, the 'overseas investment' is subject to the approval of the provincial commerce department, if
1) the total value of the investment from the Chinese enterprise is between USD 10 million and USD 100 million,
2) the investment is in the energy and mineral sector, or
3)it needs to attract investors within China.
According Art.9 of the Measure, the oversea investment shall not be approved under the following circumstances:
1) endangering the State sovereignty, security, and public interest; or against the laws and regulations of China;
2) endangering the relationship between China and the host country;
3) possible violation of international agreements between China and other countries; or
4) concerning goods or technologies that are prohibited from exportation from China.
The investor himself shall be responsible for the economic and technical feasibility of the oversea investment.
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